Lakewood local tax guide
Who pays Lakewood's local tax
Lakewood's low rate helps most when you both live and work there. People who work in Lakewood have 1.5% withheld wherever they live. Lakewood residents owe 1.5% on all wages, but the credit for tax paid to a work city covers only part of that, according to the city. Many residents commute to Cleveland or other suburbs, and they pay the work city's full tax and still owe Lakewood a balance. Every resident 18 or older must file a Lakewood return, even with no income or no tax due.
How Lakewood's 1.5% tax works
Lakewood, a Cuyahoga County city of about 51,000 packed onto the shore of Lake Erie, levies 1.5% on wages, commissions, rental income from Lakewood property, and business profit. The Division of Municipal Income Tax at 12805 Detroit Avenue administers it; Lakewood is not part of RITA or CCA.
The headline rate is low, but Lakewood's residence credit is partial. The city says residents receive only a limited credit for taxes paid to other cities, so a resident with a job in a taxing city pays two municipalities on the same wages. Check the Division's current FAQ for the exact credit before you file.
Like other Ohio cities, Lakewood taxes Medicare wages, so 401(k) deferrals do not reduce the city tax.
Worked example: $75,000 in Lakewood
For a single filer with a $75,000 job inside Lakewood, federal income tax is $7,670, Ohio tax is $1,288, Social Security is $4,650, and Medicare is $1,088. Lakewood adds $1,125. The worker keeps $59,179 a year, $4,932 in a typical month.
Against a job with no municipal tax, worth $60,304, Lakewood costs $1,125. Against the same job in Cleveland, which costs $1,875, a Lakewood workplace saves $750 a year.
The calculator above shows a resident who works in Lakewood. If you live in Lakewood but work in Cleveland, the Cleveland withholding of $1,875 comes first, and Lakewood then bills the part of its own tax that the partial credit does not cover.
Withholding and filing
Employers withhold for the city where you work, so most Lakewood residents see Cleveland, Rocky River, or another work city on their pay stub, not Lakewood. Ask payroll to withhold the Lakewood balance as well, or set money aside, because the residence balance is due when you file.
Lakewood's filing deadline matches the federal due date. Residents file even when they had no income, and nonresidents who own Lakewood rental property must file as well.
How Lakewood compares with other Ohio cities
Lakewood's 1.5% ties Lima for the lowest rate among the Ohio cities on this site. Cincinnati's 1.8% costs $1,350 at $75,000, and Cleveland, Parma, and the other 2.5% cities cost $1,875. Youngstown, at 2.75%, takes $2,063, which is $938 more than Lakewood.
For residents, though, the rate comparison is only half the story. Because of the partial credit, a Lakewood resident working in Cleveland pays more in total city tax than a Clevelander with the same job.
Tips for Lakewood paychecks
Budget for the residence balance
If you live in Lakewood and work elsewhere, expect a Lakewood bill on top of your work-city withholding. Courtesy withholding spreads it across the year.
File every year from age 18
Lakewood requires a return from every resident 18 or older, including people with no income that year.
Compare total city tax before moving
A move from Cleveland to Lakewood can raise your city tax if you keep a Cleveland job, because Lakewood's credit is partial.